In bankruptcy, a person may fear surrendering property to creditors, but remember to have courage and proceed even when there is fear. Do not wait for courage, but accept the fear. What changes people are experiences, not homework, not degrees. Scratch out the word "hope", and learn what it is like to be pushed off the edge of a cliff, forced to invent water on the way down. Declare what will happen and commit to the outcome.

In bankruptcy, there are different kinds of debts and creditors. A creditor is someone owed a debt. Secured creditors loaned money in exchange for interest in the property. The property is collateral. Secured debts include mortgages, car loans, and furniture loans. With secured debts, besides returning the property to the creditor, a debtor may pay for the property in full and keep it, or reaffirm the debt and agree to continue to pay the debt as if a bankruptcy petition was not filed, knowing that if the debt is not paid, the debtor may be sued for collections. Unsecured creditors are all other creditors such as doctors' bills, credit cards, past-due utilities.

"Hoping" creates disappointment. Every situation is temporary. People can be wrong even when they are sure. For example, when people think of bankruptcy, they think of the negatives like a ruined credit. But, filing for bankruptcy may make something possible that was not possible before. People secretly like to see others taken down. They wonder why they did not do something when they see others accomplish. When other people try to kill dreams, remember that just because they seem sure does not mean they are right.

Through bankruptcy court, the Bankruptcy Code prohibits a non-debtor counterparty in litigation from exercising any rights and remedies against the debtor or its property or from continuing litigation against the debtor.

Derivatives continue to be traded on public exchanges such as the New York Mercantile Exchange (NYMEX), but the majority of transactions are "over the counter" (OTC) trades negotiated directly between private parties that are exempt from regulation by the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC) or other governmental regulatory bodies.

With Lehman, because its bankruptcy disrupts the financial markets, the Bankruptcy Code safe harbor provisions permit counterparties to:

• terminate securities, commodities, forward, repurchase, and swap agreements; exercise contractual, exchange-specific or other rights to accelerate, liquidate, terminate or set-off under the parties' securities and derivatives contracts;
• exempt pre-bankruptcy petition settlement payments, margin payments and other transfers made in connection with securities and derivative contracts from avoidance as a preference or a constructive fraudulent conveyance when such payments are made to or through certain categories of persons.

Volcker's speech comes at the same time that the Federal Trade Commission ("FTC") issued a Notice of Proposed Rulemaking ("NPRM"), seeking comment on a proposed Rule that would regulate loan modification, foreclosure rescue, and other mortgage assistance relief ("MARS") providers.

On the issue of international consensus on the Volcker proposal, there were grounds to anticipate success. Volcker felt it would not be difficult to detail the functional definition of hedge funds and private equity funds that commercial banks would be forbidden to own, sponsor or invest in, and proprietary trading in they would be forbidden to engage. Volcker highlighted conflicts of interest in the participation of commercial banking organizations in proprietary or private investment activity, remarking "Hedge funds, private equity funds, and trading activities unrelated to customer needs and continuing banking relationships should stand on their own, without the subsidies implied by public support for depository institutions."

Meanwhile, the proposed FTC Rule, issued on February 4, 2010, would ban MARS providers from collecting fees prior to delivering MARS services, prohibit misrepresentations in the marketing of MARS services, and require affirmative disclosures about the nature and terms of the services. The proposed Rule extends liability for violations to persons or companies who provide assistance or support to MARS providers that violate the proposed Rule.

The Volcker proposals were part of structural reform to deal with the problem of "too big to fail", ensuring that large institutions and their managers and creditors do not assume a public rescue will be forthcoming in times of pressure. But, for Volcker, non-"systemically significant" non-bank institutions, such as hedge funds, private equity funds, and other private institutions, should be allowed to fail in a competitive free enterprise system.

The FTC Rule comes from 2009 Omnibus Appropriations Act, as clarified by the Credit Card Accountability and Disclosure Act, giving the FTC rulemaking authority to prevent unfairness or deception in practices involving loan modification and foreclosure rescue services.

Until now, the Obama Administration has focused its Home Affordable Motification Program (HAMP) on modifying first mortgages. However, many modifications fall through because an agreement fails to be reached with the holder of the second mortgage. So, the focus is now shifting to coming up with solutions for the second mortgage.

Many second mortgages these days are completely unsecured because property values have dropped below the balance of the first mortgage. Due to complicated accounting rules, banks prefer not to take losses on their second mortgages because doing so would cause a big hit to their balance sheets. Also, even if a borrower goes into foreclosure, the bank can pursue the borrower for the balance owed on the second mortgage. Those two factors are dissuading banks from writing down second mortgages. A homeowner cannot complete a short sale without agreement from the bank holding the second mortgage. And thus, many short sales have fallen through.

A short sale occurs when mortgage company holding the first mortgage agrees to allow the borrower to sell the home for less than the balance of the loan, and the borrower can walk away from the difference. In avoiding a foreclosure, the bank saves money and the borrower does not take a hard hit to his credit.

In a few weeks, borrowers who receive reduced payments on their first mortgage through HAMP will also receive a break on their second mortgages. Bank of America has signed up for this program and other large banks are likely to as well. The Obama administration will also be encouraging those who cannot qualify for a loan modification to pursue a short sale or deed-in-lieu of foreclosure. Holders of second mortgages may receive 3% of the unpaid loan balance, up to a maximum of $3,000, for writing down second motgages in the event of a short sale.

The higher number of filers does not reflect a worsening economy, but reflects the duration of the down times. American families have been living with joblessness, low housing prices, and tight credit markets for years, and many are unable to continue the uphill battle. The executive director of the American Bankruptcy Institute predicts that filings will top 1.5 million this year. Last year, there were 1.47 million filings.

Filers are now more likely than before to file Chapter 7 bankruptcy. Chapter 7, if approved by the bankruptcy court, allows the debtor to discharge unsecured debt and does not leave the debtor with a monthly payment. Only those making below the median income and with insubstantial assets may have a Chapter 7 plan approved.

On the other hand, Chapter 13 bankruptcies are decreasing. When Congress imposed a stricter bankruptcy code in 2005, one of the goals was to compel higher earners to file Chapter 13 bankruptcy, which requires filers to repay a portion of their debt over several years. Chapter 13 bankruptcy was in large part designed for homeowners who wanted to stay in their homes. But, so many homeowners are underwater in their homes that they have little incentive to stay. They sensibly decide to start over elsewhere with a fresh start.

An economic recovery may be on the horizon but there will be plenty of reminders of the Great Recession until then.

General Growth Properties Inc. developed Elk Grove Promenade intending to turn it into a destination shopping attraction for the south-of-Sacramento area. Instead, midway through development, General Growth filed bankruptcy and production stalled. A fence was built around the property and the partially-built mall was frozen in 2008.

Two large real estate firms, Brookfield from Canada and Simon Property Group from Indianapolis, have submitted multi-billion dollar bids to buy General Growth and its portfolio, including the Elk Grove Promenade. General Growth is in bankruptcy court in Manhattan, and the bankruptcy judge will have final say on which bid General Growth will accept.

A new owner could sit on the Elk Grove property until the market makes a large mall viable. Or, it could redevelop the property as a big-box center or an outlet mall. Any new work on the Promenade will likely only come with an improvement in the economy. Thus, the Promenade remains a large symbol of the Great Recession.

Webber was no longer with the team at the time Center Court opened and has since retired, but he remains a popular figure in Sacramento. Sacramento Kings fans have fond memories of the wildly entertaining Kings teams from the early part of last decade that consistently made it deep into the playoffs. Webber and business partner Jeff Dudum of Dudum Sports and Entertainment opened Center Court hoping to leverage that popularity into a hot Sacramento restaurant. But the restaurant business has suffered just like the rest of the economy over the last few years. Center Court could not make rent payments towards the end of last year and decided to close its doors.

Webber and Dudum signed a lease with Opus West Corporation, a real estate developer. Opus West filed for bankruptcy protection last year, one of many real estate developers that were punished by the recession.

Mitra made a New Year resolution in 2010 to help a million entrepreneurs globally reach $1 million in revenue (and beyond). She believes this would be the foundation of a robust, distributed, and sustainable economic value creation that would add up to a trillion dollars in global GDP, and result in creating at least 10 million jobs around the world.

Because every moment is fleeing, don't waste words and moments without doing what is in your hearts. Everyone fails, but everyone also has the fortune to pick him/herself up. If you are thinking of doing something negative to make ends meet, do not do it before it is too late. There may be forgiveness, but there will be pain and guilt from knowing who you are and what you did. Don't steal or seek revenge. Control anger and hate. Life is immense like the ocean. For Mitra, as she started talking to her readers about her New Year resolution, many of them stepped up to help out through a program they now formalized, called 1M/1M Ambassadors.

Be brave everyday to step into the ocean and face the immensity. Get away from situations where people do not value you. Tell yourself that you are made to be where you want to be. Believe it. With Mitra, she has been writing to her connections for support in bringing the key piece of the 1M/1M initiative to a broader audience of entrepreneurs - her free online strategy weekly roundtables address positioning, financing, and other aspects of a startup venture. Up to 1,000 people can attend each session, but only the first five who register to pitch will be able to present their business ideas. All attendees are able to join in on the conversations via a live chat.

Life is about minimizing regrets. When making choices, weigh which options cause regret. Business and people break hearts. Don't cry over people or companies who won't cry over you.

With Mitra, she seeks ways of collaborating by offering guest columns to fellow writers, as in a series, Blogosphere On Bootstrapping, which writers contributed. She welcomes people joining the 1M/1M program.

In February 2010, the California Department of Financial Institutions closed First Regional Bank, headquartered in Los Angeles, California, and the FDIC was named receiver. As of September 30, 2009, First Regional Bank had approximately $1.87 billion in total deposits and $2.18 billion in total assets. First Regional Bank is the first bank to fail in California following Imperial Capital Bank on December 18, 2009.

The FDIC, as receiver, entered into a purchase and assumption agreement with First-Citizens Bank & Trust Company, headquartered in Raleigh, North Carolina, to assume all of the deposits of First Regional Bank. First-Citizens Bank & Trust Company agreed to purchase approximately $2.17 billion of First Regional Bank's assets. First-Citizens Bank & Trust Company did not pay the FDIC any premium for the deposits of First Regional Bank.

The FDIC estimates the cost to the Deposit Insurance Fund to be $825.5 million. The FDIC has been making attempts to address bank failures. The FDIC adopted a final Statement on August 26, 2009 singling out private equity investors as affecting the ability of failing banks to attract capital, avoid taxpayer bailouts and minimize losses to the Deposit Insurance Fund.

These news events affect not only primary real property mortgages, but also increase the reduction of credit limits for Home Equity Lines of Credit. With a decline in property values, and people's inability to repay loans, creditors reducing credit limits for Home Equity Lines of Credit have become litigation targets with plaintiffs asserting violation of the federal Truth in Lending Act, 15 U.S.C. 1601, et seq. ("TILA"), and state law claims for breach of contract, unjust enrichment, and violation of state unfair practices act in credit limit reductions for Home Equity Lines of Credit. The creditor must give the borrower written notice within three business days stating the reason for the reduction. 12 C.F.R. § 226.9(c)(3).

TILA and its implementing regulation Regulation Z governs the administration of Home Equity Lines of Credit. A creditor reduces a borrower's credit limit where there is a significant decline in the value of the property securing the line of credit or a material change in the borrower's financial circumstances. 15 U.S.C. §§ 1647 (c)(2)(B), (C); 12 C.F.R. §§ 226.5b(f)(3) (vi)(A), (B). TILA "does not require a creditor to obtain an appraisal before suspending credit privileges, although a significant decline must occur before suspension can occur." 12 C.F.R. Part 226, Supp. I, cmt. 5b(f)(3)(vi)-6.

A significant decline for reduction of lines of credit "will vary according to individual circumstances." 12 C.F.R. Part 226, Supp. I, cmt. 5b(f)(3)(vi)-6. Where a borrower's available equity in a property has declined by fifty percent, the decline is significant under the statute and the credit limit may be reduced. 12 C.F.R. Part 226, Supp. I, cmt. 5b(f)(3)(vi)-6. The significant decline inquiry focuses on their available equity rather than the value of the property alone.

In three opinions issued on motions to dismiss Home Equity Lines of Credit cases, courts dismissed the plaintiffs' claims under TILA because the plaintiffs failed to adequately allege that the Home Equity Lines of Credit was obtained for "personal, family, or household purposes." Walsh v. JP Morgan Chase Bank, No. 09-04387 RGK, Docket No. 26 at 3 (C.D. Cal. Dec. 8, 2009); Wilder v. JP Morgan Chase Bank, N.A., No. 09-0834 DOC, Docket No. 26 at 4 (C.D. Cal. Nov. 25, 2009); Schulken v. Washington Mutual Bank, No. 09-02708 JW, Docket No. 30 at 6-7 (N.D. Cal. Nov. 19, 2009).

The scam has been advertised on TV, radio, and in print. It caught the attention of the California Attorney General's office, which partnered with the California Department of real Estate and the State Bar to warn consumers. The Attorney General's Office provides a number of don'ts to avoid foreclosure scams:

• Don't pay up-front fees. By law, foreclosure consultants are prohibited from collecting money in advance of providing services.

• Don't ignore letters from your lender or loan servicer.

• Don't transfer title or sell your house to a "foreclosure rescuer." This scam convinces homeowners they can stay in their home as renters and repurchase the home later. It also could be part of a fraudulent bankruptcy filing. A scammer can evict you and take your home.

• Don't make mortgage payments to anyone except your lender or loan servicer. Fraudulent consultants often keep the money for themselves.

• Never sign a document without reading it. Homeowners have unknowingly signed documents that transferred their home ownership to someone intent on evicting them.

A deed in lieu of foreclosure is fairly straightforward. A struggling borrower and his or her lender agree that the borrower will turn over the deed to the home in exchange for the bank not foreclosing on the home. The borrower may remain in the home for a number of months and does not suffer as much damage to his or her credit rating as would occur with a foreclosure. The bank releases the borrower from all legal obligations to repay the loan. A deed in lieu involves less legal costs for a bank than foreclosure and also incentivizes borrowers to keep the homes in better condition.

CitiMortgage is planning a pilot program for deeds in lieu in a number of eastern and midwestern states. Qualified homeowners would receive six months to live in the home and $1000 in relocation assistance as long as they maintain the property in good condition. To qualify, a homeowner must be 90 days late on their mortgage and not have a second lien. Citi expects only about 1,000 borrowers to take advantage of the offer because of how many of its customers have second mortgages.

Other lenders consider deeds in lieu on an ad hoc basis. If you are interested in pursuing a deed in lieu or any alternative to foreclosure, contact a specialist who has helped many borrowers find a better option to foreclosure.

Lawsuits filed in the Eastern District of U.S. Bankruptcy Court in Sacramento allege that OneWest's shared-loss agreement with the FDIC means that the bank profits more from foreclosures than from working out arrangements with borrowers. The lawsuits accuse OneWest of boosting debtors' monthly loan payments after the borrower has entered bankruptcy, which is in violation of the bankruptcy code. Another lawsuit in Sacramento Superior Court accuses OneWest of violating the Truth in Lending Act by not responding to a borrower's attempts to modify the mortgage.

OneWest Bank did not issue the loans in question. IndyMac bank was one of the Sacramento area's top lenders, having made 5312 home loans worth $1.4 billion from mid-2005 to mid-2007. But, once the market tanked, IndyMac was insolvent and the FDIC hastily took over the bank in July 2008. In March 2009, the FDIC sold the IndyMac portfolio to OneWest and agreed to absorb a share of losses.

The Treasury Department released data showing that a dozen lenders have outperformed OneWest in the rate of homes receiving modifications. Still, OneWest has done better than nine other lenders. OneWest had permanently modified 3,087 of its 112,000 delinquent loans by the end of January.

The FDIC has responded to the allegations by pointing out that it has 94 shared-loss agreements with financial institutions that have purchased troubled loan portfolios. OneWest is on the hook for the first $2.5 billion in loan losses before it receives a penny from the FDIC, and the FDIC has not paid OneWest a penny yet. The FDIC can rescind the deal if OneWest does not comply with its agreement to modify loans.

There is no more universal default. Before, credit card companies could scan your credit report and raise your interest rate based on a late payment on another line of credit. Now, existing rates cannot be raised unless the account is 60 days past due, and if the borrower makes on time payments for six months, then the original rate is restored.

Promotional interest rates must last six months and interest rates on new credit card accounts must last one year. Card companies must furnish borrowers with 45 days notice for rate hikes.

There are no more over-the-limit fees. Instead, card companies should decline approval on purchases that would take you over your credit limit unless you opt-in to a program that allows you to go over your limit for a fee, and even then only one fee may be attached per billing cycle.

There are no more fees for making payments over the phone or on the internet. You may still face a fee if you have to speak to a live person to process your payment. Overall, service fees, such as activation and annual fees, may not add up to more than 25 percent of your credit limit in the first year.

Bills must be more forthright. They must print how many months it would take to pay off the balance if the borrower made just the minimum payment and how much to pay if the borrower wants to pay the balance within three years.

There will be less free stuff on college campuses. The bill prevents banks from handing out free gifts on or near college campuses or at college-related events. Cards may not be issued to anyone under 21 without a co-signer unless that individual can prove that he or she has enough income.

SaaS relates to software deployment where a provider licenses an application for use as a service on demand. Instead of installing a product on its own systems as in a licenses model, customers of SaaS allow the SaaS vendors to host the application on their own web servers or download the application to the consumer device, disabling it after the on-demand contract expires. The customer should check the vendors and their service providers for credit risks. For instance, a cloud computing supplier relies on hosting services so even if the supplier does well, the customer's operations could be affected if the supplier's hosting services cannot find funding.

In bankruptcy, a debtor has the right to reject or assume and/or assign executory contracts. These are ongoing contracts where performance remains due by both parties. A non-debtor party must continue to perform post-petition contractual obligations, and is not able to terminate the agreement because of bankruptcy. A customer that does not want to continue paying a vendor who cannot perform should consider making personal service agreements. Personal service agreements are easier to terminate because they are less assignable. Make agreements more personal by naming personnel to do work.

When there are performance difficulties, demand adequate assurance of due performance. Under UCC Section 2.609, if the other side is unable to provide adequate assurance, it is considered anticipatory repudiation allowing the non-breaching party to walk away under UCC Section 2.702(1).

Requesting a source code escrow may be the way to go to maintain access to a vendor's product during bankruptcy. In escrow provisions, request access to engineers who wrote the code to learn how to use source code.